Dear Narendrabhai, the nation needs De-L1-isation even more than demonetisation

Dear Narendrabhai,

Even though I am assured to antagonise a large number of English reading Indians, let me commence by stating that I really feel that demonetisation was a great idea, so I am trying to instigate you for something bigger.

For me, I plan to wait for the income tax return cycle to get over before deciding if demonetisation has worked or failed. India needs transformational reforms and hence I fully agree with you that they have to be radical.

As you have dared to do what no man/woman has done before, I want to convince you to propose the most radical change in government processes. I want you to try De-L1-isation in all government contracts.

If we want to build a new India with quality, we have no choice but to dare and move out of the Lowest Bidder (fondly addressed as L1) based procurement, as it has actually turned us into a corrupt nation with arguably worst public sector infrastructure. If we want to build a nation that our kids are not going to be ashamed of, we need to do De-L1-isation NOW.

At this point, we are a land of philanthropists or magicians, depending on how we look at it, especially in construction contracts and allied consulting domains.

As these great people are hidden behind government processes, I am forced to consider my readers who are uninitiated to the wonderful machine called government and explain their magic.

A typical road or government hospital that a citizen may have misfortune to use (including the road) is built through a tendering process. A tender is prepared by a consultant or government department, using a set of rates known as schedule of rates (SoR).

As civil engineering happens to be an open-and-shut branch of engineering, there is no mystery involved in working out the cost of every item. Every unit of a wall or a slab is bound to use a fixed amount of bricks or steel or cement as per the universally known specifications. So, there are government prescribed SoRs worked out by engineers and are available and mandatory to use for estimating cost of any public infrastructure project.

So, well before a government building is constructed, it is always possible to know at least the per unit cost of all basic items as, it would require magic to not use prescribed amount of cement or steel or bricks and still have the building standing.

Interestingly, very rarely a bid in a government tender is found to be matching with the SoR, as our contractors are often found to be able to perform the magic of quoting 15 to 20 percent less than the SoR! And, such quotes are not exceptions, but are norms.

Which means that, either they are not using the prescribed material or they are losing money for serving us or they know magic.

I am forced to presume that if these contractors are not magicians, they have been making a great sacrifice of losing money for our sake in tenders after tenders. So, if nothing else, as a token of appreciation for their service to the nation, we should consider De-L1-isation.


Setting aside the satire, you and I both know exactly what has been happening over the years in government contracts, and about time, we as a nation accept the problem and do something about it.

I agree that the entire process of finding the Lowest Bidder is based on the wonderful idea of fair competition and price discovery to save hard earned public money from getting wasted. But what has actually happened on the ground?

Government contracts are mostly reduced to either mafia or suicidal bidders who quote impossibly low rates and grab critical infrastructural projects. As we are a nation in a hurry, government officer, even if he has no ulterior motives, has to accept the lowest bid and take the pain of handholding the low-bidding crook across.

The most common result is delays, even more corruption, administrative compromises and, at the very end, a really badly constructed piece of public infrastructure.

Sir, if the L1 process was designed to be cost-effective and to prevent corruption, let us be honest enough to admit that it has failed miserably with M capital.

What I have observed about us as a nation is that we have spent seventy years of thinking that each one of us is a crook and thus must be prevented from stealing from the common kitty. Every policy that we have designed has been aimed at preventing corruption. And, yet, after seventy years of these policies in place, we are second to none in corruption.

So, Sir, this is an hour of reckoning, especially as you are dreaming of building an India belonging to the first world. Let us accept that we have lived with seventy years of wrongly- designed policies and we need to change.

The reality is, corruption is NEVER borne of the legal loopholes. It is born in the mind of people who are not sure of fairness of the system and see the need to protect personal interests. So, the only way out of the web of corruption is to have a paradigm shift in how we design our policies.

I propose that, as an experiment, let us set aside the central idea of price discovery in infrastructure tendering and replace with a mechanism that allows quality to play a role.

Why not have tenders with fix SoR based cost and only qualitative competition between contractors?

We already have parameters defining technical and financial strengths linked with ability to deliver. If these parameters are more formalised, and a cap is put on the amount of work one agency can take, we can replace L1 system with Q1, i.e. work awarded to qualitatively best qualified agency.

There is no doubt that corruption is too ingrained in our business culture for Q1 based system to not result in encashement by contractors, but if we improve our contract enforcement, especially in terms of fixing liabilities by backing it with judicial support, we can reduce negative impact of removal of price discovery and promote meritocracy over time.

The biggest advantage of De-L1-isation would be removal of the need to cheat that drives the entire engine of corruption right now. In existing system, an under-bidding contractor has to cheat; so, in turn he is forced to vitiated the system and develop a corruption based nexus with all stake-holders in the government.

At this point, L1 system is not only driving corruption, but it is also keeping technocrats with merits but not skilled to handle corruption out of the business.


We have feared corruption a bit too long and have gained nothing out of it. Let us try something radically different as a nation. Please seriously consider a move away from lowest bidder based format in not just civil construction but all other sectors.

I am sure that it will take iron resolve to do something so dramatic, not only because you will be hounded for aiding and abetting corruption, but because it will be bucking a giant edifice of wasted interests of some of the most powerful people of the nation. But, it has to be done for the sake of nation.

So, I hope that you are ready to take up this challenge.

– A citizen hoping to see a first world nation created out of his homeland.

I am happy to admit that I have managed surviving till now with minimum effort as all my intellect has be used to avoid doing anything meaningful. As I needed to while all the free time I generated in course of being lazy, science has been my favorite muse that I have enjoyed company of. As an effort to kill time (in a way, to get even with it) one fine day I decided to write a science column, more for my personal amusement than to attract readers. After getting educated about the attention span of modern readers from my editor, it became more like a challenge to tackle esoteric subjects in 600 words that I have managed to remain interested in for more than a year now. I do not want to add my worldly profile here as these are ideas that need to be considered only on the merits they carry and not as an opinion of a certain human being.

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